Demand shocks, advance production and market power: some lessons about markets from the laboratory

Douglas Davis and K. Ramagopal
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K. Ramagopal: The School of Business Administration, University of Vermont, Burlington, VT 05405, USA, Postal: The School of Business Administration, University of Vermont, Burlington, VT 05405, USA

Managerial and Decision Economics, 1998, vol. 19, issue 4-5, 205-223

Abstract: This paper summarizes some recent research pertaining to laboratory markets, and then discusses some of the implications of this research for applied economics and policy. Three results are discussed: (a) in one-sided markets where sellers' post-prices price-tracking response to demand shocks is very poor; (b) despite the prominence of the Cournot model as a centerpiece for applied research, it is very difficult to construct an environment where Cournot outcomes are observed; (c) market power, or the capacity of sellers to unilaterally deviate from the competitive prediction, is a prominent characteristic in short-run price-setting contexts. © 1998 John Wiley & Sons, Ltd.

Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:19:y:1998:i:4-5:p:205-223

DOI: 10.1002/(SICI)1099-1468(199806/08)19:4/5<205::AID-MDE887>3.0.CO;2-#

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